The concept of a moral economy was an elaboration by English historian E.P. Thompson of a term already used by various eighteenth century authors, who felt that economic and moral concerns increasingly seemed to drift apart (see Götz 2015). Thompson wrote of the moral economy of the poor in the context of widespread food riots in the English countryside in the late eighteenth century. According to Thompson these riots were generally peaceable acts that demonstrated a common political culture rooted in feudal rights to “set the price” of essential goods in the market. These peasants held that a traditional “fair price” was more important to the community than a “free” market price and they punished large farmers who sold their surpluses at higher prices outside the village while there were still those in need within the village. In the 1970s the concept of a moral economy was developed further in anthropological studies of peasant economies. The notion of a non-capitalist cultural mentality using the market for its own ends has been linked by others (with Thompson's approval) to subsistence agriculture and the need for subsistence insurance in hard times.
The concept was widely popularized in Anthropology through the book, " The Moral Economy of the Peasant: Rebellion and subsistence in Southeast Asia " by James C. Scott (1976). The book begins with a telling metaphor of peasants being like a man standing up to his nose in water; the smallest wave will drown him. Similarly, peasants generally live so close to the subsistence line that it takes little to destroy their livelihoods. From this, he infers a set of economic principles that it would be rational for them to live by. It is important to emphasize that this book was not based on fieldwork, and itself proposed a cross-cultural universalistic model of peasant economic behaviour based upon a set of fixed theoretical principles, not a reading of peasant culture. Firstly, he argued that peasants were "risk averse", or, put differently, followed a "safety first" principle. They would not adopt risky new seeds or technologies, no matter how promising, because tried and true traditional methods had demonstrated, not promised, effectiveness. This gives peasants an unfair reputation as "traditionalist" when in fact they are just risk averse. Secondly, Scott argues that peasant society provides "subsistence insurance" for its members to tide them over those occasions when natural or man-made disaster strikes.
A just economy
A moral economy , in one interpretation, is an economy that is based on goodness, fairness, and justice. Such an economy is generally only stable in small, closely knit communities, where the principles of mutuality — i.e. "I'll scratch your back if you'll scratch mine" — operate to avoid the free rider problem. Where economic transactions arise between strangers who cannot be informally sanctioned by a social network, the free rider problem lacks a solution and a moral economy becomes harder to maintain.
In traditional societies, each person and each household is a consumer as well as a producer. Social networks create mutual understandings to promote the survival of these social units in the face of scarcity ; these social ties operate to prevent the economic actors in traditional societies from behaving to maximize personal profit. Traditional understandings arise as to the relative value of various goods and services; they are not independently renegotiated for each transaction in an impersonal, anonymous market. Traditional staple foods and other goods deemed necessary for the survival of the community acquire customary prices; dearth or plenty should be shared by all. These traditional understandings acquire the force of custom, and with increased social complexity may eventually acquire the force of law.
The Efficient Society by Joseph Heath discusses the nature of a moral economy in these terms, and argues that Canada has achieved the proper balance between social needs and economic freedom, and as such comes close to being a moral economy. Other economists such as John P. Powelson relate the concept of a "moral economy" to the balance of economic power ; in their view, a moral economy is an economy in which economic factors are balanced against ethical norms in the name of social justice.
Right Relationship by Brown and Garver, discusses the urgent need for achieving an economy that is recognized to be a subsidiary of the overall ecosystem of the planet. They address key questions regarding the purpose, function, appropriate size, fairness, and governance of a world economic system and propose new ideas to place our economy in correct relationship with the Earth's ecosystem. They argue that such a moral economy is essential if we are to avoid systemic collapse as our growth economy outstrips the Earth's limited ability to recycle our waste, and as the Earth's inventory of critical raw materials and minerals is used up, in the face of growing population and growing affluence within those populations.
Economics and social norms
In a related sense, "moral economy" is also a name given in economics, sociology and anthropology to the interplay between cultural mores and economic activity. It describes the various ways in which custom and social pressure coerce economic actors in a society to conform to traditional norms even at the expense of profit.
Prior to the rise of classical economics in the eighteenth century, the economies in Europe and its North American colonies were governed by a variety of (formal and informal) regulations designed to prevent "greed" from overcoming "morality". In its most formal manifestations, examples such as the traditional Christian and Muslim prohibitions on usury represent the limits imposed by religious values on economic activity, and as such are part of the moral economy. Laws that determine what sort of contracts will be given effect by the judiciary, and what sort of contracts are void or voidable, often incorporate concepts of a moral economy; in many jurisdictions, traditionally a contract involving gambling was considered void in law because it was against public policy. These restrictions on freedom of contract are the results of moral economy. According to the beliefs which inspired these laws, economic transactions were supposed to be based on mutual obligation, not individual gain. In colonial Massachusetts, for example, prices and markets were highly regulated, even the fees physicians could charge.
Other forms of moral economy are more informal. In the sixteenth and seventeenth century, for instance, clergymen often preached against various economic practices that were not strictly illegal, but were deemed to be "uncharitable". Their condemnations of selling food at high prices or raising rents probably influenced the behavior of many people who regarded themselves as Christian and worried about their reputations.
Likewise, during the rapid expansion of capitalism over the past several centuries, the tradition of a pre-capitalist "moral economy" was used to justify popular action against unscrupulous merchants and traders. For example, the poor regularly rioted against grain merchants who raised their prices in years of dearth in an attempt to reassert the concept of the just price. The Marxist historian E. P. Thompson emphasized the continuing force of this tradition in his pioneering article on "The Moral Economy of the English Crowd in the Eighteenth Century" (1971). Later historians and sociologists have uncovered the same phenomenon in a variety of other situations, including peasants' riots in continental Europe during the nineteenth century and in many developing countries in the twentieth. The political scientist James C. Scott, for example, showed how this ideology could be used as a method of resisting authority in The Moral Economy of the Peasant: Subsistence and Rebellion in Southeast Asia (1976).
It must be remembered, however, that sometimes a moral economy may not act in conformity to morality as it is now generally understood. Social pressures to enforce racial segregation even when willing buyers and sellers would erode the racial barriers, are clearly an example of cultural pressures imposing economic inefficiency, and therefore fall within the purview of moral economy.
Utopian moral economies
In modern times, "utopian moral economies" have arisen to systematically reorganize their economic system to reflect a particular moral or ethical code that rejects the free-market ethos of capitalist economies. Societies that pursue some derivative of Socialism or Communism are obvious examples of this impulse, along with small-scale attempts in the form of the Israeli kibbutz and the intentional communities of the 1960s and 70s.
Very few of these experiments - with the possible exception of the kibbutz - turned out the way their founders had imagined. Unsurprisingly, a revolutionary reorganization of some of the most fundamental parts of society often resulted in the severe dislocation of many people's everyday lives and the loss of whole generations to schemes like Stalin's failed policy of collective farming. However, many of the small and pragmatic attempts to make the capitalist economy more moral (e.g. fair trade, moral investment funds, the development of renewable energy sources, recycling, cooperatives, etc.) have grown from the same impulse that drove the utopian revolutionaries. These developments, however, do not fully realize their intentions, being fundamentally at odds with the mechanisms in the capitalist economy, such as cyclical consumption, the inherent duplicity of goods in competition, and the process of "externalizing" those costs which are not directly pertinent to an actor's finances.
- Economic anthropology
- Free rider problem
- Intentional Community
- Just price
- Moral hazard
- Moral panic
- Non-market economics
- Perverse incentive
- Social dilemma
- Thompson, Edward P. (1991). Customs in Common . New York: New Press.
- Thompson, Edward P. (1991). Customs in Common . New York: New Press. p. 341.
- Scott, James C. (1976). The Moral Economy of the Peasant: Rebellion and subsistence in Southeast Asia . Princeton: Princeton University Press.
- Horwitz, Transformations in American Law , p. 173
- Collinson, "Puritanism and the Poor"
- Thompson, "Moral Economy of the English Crowd"; Randall and Charlesworth, Moral Economy and Popular Protest ; Bohstedt, The Politics of Provisions
- Van Tessel, "Only the Law"